As you may know when Covid hit the UK in March 2020 it resulted in a huge shift in the Mortgage market.
Prior to March 2020 the industry was as relaxed as I have seen it since becoming a Mortgage broker in 2011. Credit scoring was in a good place, we were getting people through with adverse on the high street quite regularly. Criteria was relaxed and the rates available were still in a good place. They were probably not at an all time low, but they were not far off.
I think the only thing that was not as great as it had been was affordability. However that was due to some regulatory changes brought in a few years prior.
Mortgages after March 2020 with Covid
In the space of a month things had just completely changed. We had lenders pulling down the shutters to new applications. We had a couple of lenders cancelling applications and even mortgage offers! If you wanted anything above 75% LTV you were going to struggle and it was going to cost and if you wanted a Mortgage above 85% LTV it was nigh on impossible.
Rates jumped up and credit scoring became a nightmare even for the customers with no complications. Self employed people, it felt like they became second class citizens and were treated much more harshly.
Then there was furlough and initially lenders were not really sure what to do. Some went in the direction that if you were on furlough, it was an automatic decline. Others would take a view on it. Some took it initially but then as things progressed into April and May they changed their stance.
As their business volumes dropped they themselves put staff on furlough which then meant everything took an age to be processed. Looking back, 2020 was horrible in the mortgage market.
Mortgages in 2021
2021 has been a strange year. Early 2021, rates started to come down and we started to see more 90% and 95% LTV mortgages coming back – albeit at higher interest rates.
Service levels with lenders were still poor and we still had lenders who had not come back to market or at least not fully.
It has only been since July/August 20201 where the mortgage market has started to feel a lot more like it was pre-covid.
I think we have probably now got Covid in the rear view mirror. Things appear to be returning to how they were and every day feels like there are improvements.
We are not back to pre-covid levels but we are much closer than we have been. I
I expect this will probably be the last covid post we do as I think we now need to start looking forward, we are hearing from lenders about their plans for the future which is something they have not done for 12-18 months.
There are still some parts of the industry that are complex but with Furlough coming to an end this week, as of next month I think it will be limited to self employed applicants. It will be interesting to see how lenders assess Self Employed applicants going forward.
That might be a future post once we start to see whether or not lenders make some positive changes in light of what has happened. At the minute it appears only the more specialist lenders are thinking of making a change to their process.